All three components of the index rose in July. Current sales conditions rose five points to 60—the highest level since early 2006. The component gauging sales expectations in the next six months gained seven points to 67, and the component gauging traffic of prospective buyers rose five points to 45—marking the strongest readings for each since late 2005.

“Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten,” noted NAHB Chief Economist David Crowe. “Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften.”Sales of newly built homes rose just over 2 percent from May to June. Single family housing starts were flat. But permits, considered a more reliable indicator, gained 1.3 percent month-to-month.

Article source: http://www.cnbc.com/id/100889688

In their most recent quarterly statements, all of the largest public home builders reported large annual jumps in the average prices of their homes sold. Pulte’s prices jumped 6 percent to $287000, for Lennar it was a seven percent surge to 261,000 and Meritage led the group with a 17 percent annual jump in average sale prices to $323,000.

(Read More: Soaring Housing Stocks in Perspective)

“New home prices are advancing faster than existing home prices because demand has increased and, as Kim did admit, the mortgage filter is allowing only higher income or at least higher net worth people through the application net, and they are purchasing higher valued homes. But that is true of existing purchases as well,” argues David Crowe, chief economist for the NAHB.

Crowe also makes the argument that new home prices are dictated by costs and demand. Both, he says are rising.

(Read More: New Housing Fears:Home Prices Are Rising Too Fast)

“Lumber and other building material prices have risen very rapidly recently. Shortages of lots and labor supply are beginning to show up, and I expect as new household formations begin to recover, that shortage will expand to more markets. The way to get more resources back into the housing market is to raise the price paid, i.e., wages and land prices,” says Crowe.

Builder profits, he notes, among the small private builders (who still control 70 percent of the market), have been negligible for several years.

“They will have to raise prices to compensate for their efforts, risks and, at least for a short time, being the only ones left,” adds Crowe

(Read More: Is the Refi ‘Apocalypse’ Really Upon Us?)

Article source: http://www.cnbc.com/id/100439451

(Read More: Homeowners With No Mortgage Offer Clues to Recovery)

“House price improvement has been the biggest reason we’ve seen more confidence improving in general, and prices are taking a stronger hold out West,” said David Crowe, NAHB’s chief economist, who notes that monthly regional moves can be more dramatic. A three-month running average, however, still puts the West ahead of the rest of the nation.

Builders out West have also been heartened by a huge drop in distressed properties, thanks to an influx of large-scale investors looking to reap the rewards of a growing single-family rental market. As supplies of homes for sale drop there precipitously, the builders are moving in again.

(Read More: Banks Pay Big for Robo-Signing…Again.)

Article source: http://www.cnbc.com/id/100384154

After a summer of significant monthly jumps in confidence among the nation’s home builders, fall appears to be bringing in a chill.

Builder sentiment edged up just one point in October, according to an industry association index, but credit issues still plaguing the market appear to be holding sentiment from making the final move from negative to positive.

(Read More: Are Big Home Builder Stocks Too Hot?)

“The slight gain in builder confidence this month is an indication that, while still moving forward, the speed at which the housing recovery is proceeding is being moderated by the various constraints such as tight credit, difficult appraisals and more recently, the limited inventory of buildable lots in certain markets,” explained National Association of Home Builders’ chief economist David Crowe. “These are the complicating factors that make it difficult for builder confidence to reach and surpass the 50-point mark, at which an equal number of builders view sales conditions as good versus poor.”

Buyer traffic continues to improve, marking the only positive move in the NAHB’s monthly index. Both current sales conditions and sales expectations over the next six months were unchanged, both still below the positive mark. Regionally, confidence improved in all but the Northeast region.

(Read More: How to Play the Housing ‘Boom’)

Record low interest rates are bringing buyers back to the market, tempting them, but often turning them away at the same time. The rates are great, if you can get them, but a lot of potential buyers, especially much-needed first-time home buyers, cannot.

“You have to have substantial down payment. The minimum down payments are difficult,” says Jane Fairweather, a real estate agent in Bethesda, Maryland. “The people that can manage them run into appraisal problems, banks are still squirrely, so mortgage money is still an issue in the marketplace.”

That is not likely to improve any time soon. Details on new regulations in the mortgage market are beginning to leak out of the Consumer Financial Protection Agency, and while they appear to be less onerous than once expected, they are not exactly benign.

“For us the biggest issue with QM (the Qualified Mortgage rule that will be issued by the CFPB as part of financial reform legislation) remains that banks have an incentive to be more conservative in their underwriting until they are confident on how the Qualified Mortgage safe harbor will protect them from borrowers trying to avoid foreclosures by claiming that they never should have gotten the loan in the first place,” writes Jaret Seiberg of Guggenheim Securities. “This is why we believe we remain at risk for a purchase mortgage credit crunch in 2013.”

(Read More: Homebuilders Rise as Market Continues Recovery)

While credit is an obstacle to the home builders, dramatically low supply of existing homes is a near-term boon.

“October is going rather well. What I see as an interesting story is that realtor listings of existing homes keeps dropping,” notes Stephen Paul, executive vice president of MidAtlantic Builders in Rockville, Maryland. “I think the reason for this is that we are past the big short sale and foreclosure problem, and the balance of people are remaining in their homes with upside down mortgages, making their regular payments. They are not moving, not defaulting, just standing pat. That has shrunk the existing home inventory and will help the new homes market.”

CNBC Realty Check producer Stephanie Dhue contributed to this report.

Sector Watch: US Home Builders

• Toll Brothers
  [TOL 
  Loading... 
   
   
  ()
   
  ]
• DR Horton
  [DHI 
  Loading... 
   
   
  ()
   
  ]
• Hovnanian Enterprises
  [HOV 
  Loading... 
   
   
  ()
   
  ]
• PulteGroup
  [PHM 
  Loading... 
   
   
  ()
   
  ]
• Ryland Group
  [RYL 
  Loading... 
   
   
  ()
   
  ]
• Lennar Corp
  [LEN 
  Loading... 
   
   
  ()
   
  ]
• Beazer Homes USA
  [BZH 
  Loading... 
   
   
  ()
   
  ]
• Meritage Homes
  [MTH 
  Loading... 
   
   
  ()
   
  ]
• KB Home
  [KBH 
  Loading... 
   
   
  ()
   
  ]

Questions?  Comments?  And follow me on Twitter @Diana_Olick